VAT Paid To Foreign Governments Not To Be Expensed

06.08.2010

VAT paid to a foreign government, as well as VAT paid to foreign suppliers, is not to be considered an expense for tax purposes.

According to Russia’s Tax Code, organizations that charge VAT to foreign purchasers in connection with providing work, services, or property in Russia are not legally allowed to consider this an expense when calculating their profit tax base.

Furthermore, “foreign” VAT paid to suppliers for goods, work, or services in a foreign country should, for the same reason, not be considered part of one’s profit tax base in Russia. Ministry of Finance Letter #03-03-06/1/407 from June 11, 2010 introduced these clarifying points.